Lower taxes, cheaper gas: What do the Mexican president-elect's policies mean for the border?

Mexico's President-elect, Andres Manuel Lopez Obrador takes time to take selfies with his supporters as he arrives at Mexicali's Civic Center on September 20, 2018 during his "Gratitude Tour" to the capital of Baja California. (Photo: Omar Ornelas,The Desert Sun-USA TODAY NETWORK, )

A farmer who grows cotton and wheat in the Mexicali Valley said fertilizer and diesel are more expensive in Mexicali than they are on the northern side of the border. A businesswoman said high taxes and the high cost of gasoline and electricity have resulted in sluggish sales at her Mexicali gift shop. And a martial arts instructor called for an end to corruption in Mexico.

All three attended a rally Thursday evening outside Mexicali's civic center, where incoming Mexican president Andrés Manuel López Obrador promised to fulfill his campaign pledges to improve quality of life along Mexico's northern border. He proposed several steps to reduce the cost of living along the border region — moves intended to boost the local economy and make it more competitive with the United States.

López Obrador, a left-leaning populist known in Mexico as AMLO, was elected president in a landslide victory in July and will be sworn in Dec. 1. More than two months before he takes office, he is touring the country, thanking voters and promising to comply with his major campaign promises to end corruption, reduce violence and address poverty.

In Mexicali, he spoke for about 30 minutes to several thousand people, many of whom waved Mexican and gay pride flags; groups of farmers, teachers and those opposed to the local government held signs. At the rally, Lopez Obrador vowed to convert Mexico's entire northern border region — including the state of Baja California, which borders the U.S. state of California — into a duty-free zone. In Mexicali, he said, he would cut the country's value-added tax, known in Mexico as IVA, from 16 percent to 8 percent, beginning Jan. 1.

These initiatives are intended to "level the field economically," so the Mexican side of the border can compete with the U.S. side, said Rafael Fernández de Castro, director of the Center for U.S.-Mexican Studies at the University of California, San Diego. He questioned whether López Obrador could reduce these taxes without causing budgetary problems.

Reached Friday in Texas at a meeting of 30 mayors from both sides of the border, Fernández de Castro said the elected officials are excited about the president-elect's proposals because they know the prosperity of border communities are intimately connected.

"They know that if cities on the Mexican side do better, that will have positive consequences on the U.S. side of the border," he said. "If Ciudad Juarez does better economically speaking, it will have positive economic repercussions in El Paso."

A sign demanding better electrical rates is seen in the crowd as Mexico's President-elect, Andres Manuel Lopez Obrador arrives at Mexicali's Civic Center on September 20, 2018 during his "Gratitude Tour" to the capital of Baja California. (Photo: Omar Ornelas,The Desert Sun-USA TODAY NETWORK, )

López Obrador also promised as of Jan. 1, in the border region, to double the minimum wage and ensure the costs of gasoline, diesel and power are the same as in U.S. border cities. These proposals elicited some of the strongest applause of the evening.

The president-elect's gasoline pledge comes more than a year after Mexican President Enrique Peña Nieto’s administration removed fuel subsidies, causing a dramatic rise in gas prices and spurring demonstrations throughout the country. The outrage was particularly strong in Mexico's northern border cities, where people know they can travel a few miles across the border and get significantly cheaper gas in the U.S., said David Shirk, an expert on Mexican politics at the University of San Diego.

"The cost of living is much higher in the northern border region, so the additional expense for gasoline may be the straw that breaks the camel's back," he said.

Shirk said the president-elect's fuel proposal is popular in Mexico's border communities, but he questioned whether it will be economically feasible, amid the other tax cuts and added services and benefits López Obrador has proposed.

"He's promising to help people in Baja California with lower gas prices at the cost of the Mexican government, while also simultaneously lowering taxes," Shirk said. "That seems like the kind of promise every voter loves to hear, but ultimately it may not be tenable, when it comes time to pay the piper."

Mexico's President-elect, Andres Manuel Lopez Obrador takes time to take selfies with his supporters as he arrives at Mexicali's Civic Center on September 20, 2018 during his "Gratitude Tour" to the capital of Baja California. (Photo: Omar Ornelas,The Desert Sun-USA TODAY NETWORK, )

López Obrador kicked off the rally about 6:15 p.m., as the sun was setting over Mexicali. He vowed to end corruption and repeated his pledge to cut the salaries of government officials, including his own. He said he will make 40 percent less than Peña Nieto does now and all other officials will make less than him.

He reiterated his promise to sell the country's presidential plane and fly coach, despite his commercial flight from Oaxaca to Mexico City being delayed for more than three hours the night before the Mexicali rally.

"It would embarrass me to fly in a luxurious airplane, in a country with so much poverty and so much need," he said in Spanish.